Spotify Offers Additional Response To Independent Label Defections

After receiving so many strongly negative comments to yesterday's response from Spotify regarding several indie labels leaving the streaming music service, and today's news that athird had exited, I asked the company for further comment on the criticisms particularly those coming from the independent music community. Spotify's reply:

"As the statement that you've printed says, Spotify is generating serious revenues for rights holders, labels, publishers and the artists that they represent. We have paid over $100m to rights holders since our launch, and the overwhelming majority of our label partners are thrilled with the revenues we're returning to them. Spotify is now the second single largest source of digital music revenue for labels in Europe, according to IFPI.

I can also add (that) Spotify has paid many millions of dollars to the indie music community since our launch and the overwhelming majority of our indie label partners are thrilled with the revenues we're returning to them.

Our indie label content is a crucial part of Spotify and offering their music on the service allows our users to experience a hugely diverse catalogue spanning every musical genre. In return, we give indie labels a powerful monetisation and promotional platform as well as exposure to an eclectic and passionate audience of music lovers."

One thing Spotify could do is post what indie labels it has been paying money to. Artists only get paid when someone streams their music - as far as I know, they don't get up-front payments just for being on Spotify. If an artist's music isn't streamed, that artist doesn't get paid. Spotify could post the top labels streamed and we might see whether those who are complaining aren't getting streamed (much).

I do take issue with rates negotiated individually. I think this system NEEDS to be equal payment to all artists - based on number or songs or duration or some combination of those things. That is not something I feel comfortable budging on because ultimately, it means that big labels make a lot of money and smaller acts essentially have no choice but to join in at whatever rate Spotify decides is appropriate.

Why doesn't Spotify just open their books and show us who/what is getting paid? If I knew it was monetarily beneficial to musicians/artists everywhere this argument would be over! Why not be transparent instead of all these non-disclosing press releases?

Spotify is a supplement to any artists master usage anyways. Lets just find out right now, rather than later, if they're helping or hurting the future of music.

"We have paid over $100m to rights holders since our launch,and the overwhelming majority of our label partners are thrilled with the revenues we're returning to them."

That may be true, but what's the breakdown? Who exactly is getting the money? The “label partners” are pleased because they are getting paid money from all of their artists, so their aggregate sum is probably a nice pile of cash. But what are the artists, the people who actually make the music, getting paid??? I'd like to see more bands/artists reveal the amazing amount of money Spotify is paying them…

Regardless, 100m combined paid to EVERY provider and rights-holder divides to a very small amount for everyone involved. However, Spotify's low pay to all involved doesn't seem to be bothering the majors so the bulk of that 100m must be going somewhere.

You're right: I seem to be mixing Artist and Label/Distributor. I don't know whether a label/distributor passes the payment per stream to the owning artist or pays all artists for music streamed. In the case of Indie labels, I believe the former is actually the case: Spotify pays the label per stream, the label takes a cut and pays the artist, possibly in a combined payment for all the artist's tracks streamed.

In any case, what I am saying is that pay-per-stream is similar to popularity and the ability of people to discover that artist. I figured Spotify wouldn't post individual artists but it could post labels. What would invalidate my argument is that the most popular labels (and their artists) aren't making much money compared to, say, mp3 sales.

I guess that depends on your subscription plan with Spotify. For on-demand music services like Spotify, MOG and Rhapsody, I agree that the virtual collection replaces the real collection. For "personal radio" services like Pandora perhaps the user has no collection (or doesn't like maintaining long playlists).

So in your $100m model, where's the other $15m going? Paying $5m to Sean Parker for each time he looks Daniel Ek in the eye during their f8 interview?

2) For years the majors have controlled (about) 80% of the recorded music industry - mainly through releasing as many acts as they can with bigger marketing budgets than the indies, not to mention individual bands/artists. That's scale - not a scam. Lady Gaga and co will have more streams (and therefore a bigger pie slice) that Joe Bloggs and the Nobody Band because she has access to mainstream traditional media channels (TV / radio etc) that do still have a lot of influence - whereas Joe Bloggs has a couple of well-meaning friends and his mum listening, and nobody else.

The music industry, like life in general, isn't fair. If the next guy can reach more people / get more fans than you, he'll make more money from all his income streams. And to complain about it is akin to taking a fart to a shit fight, then bitching because you didn't win.